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Question: Is debt consolidation a good choice for me?

(Posted by: Jaime on 2010-07-21 15:22:51)

I am up to my eyeballs my husband and I got laid off so we have been putting our expenses on credit cards, I have good credit and do not want to sacrifice my credit score but I need help I am getting overwhelmed. Is debt consolidation a good choice? How does it work?

Posted by: Judy on 2010-07-21, 15:28:14

There are other choices such as: The government approved non-profit out there to help you. National Foundation for consumer credit councelling NFCC.org They will help you at no cost. Go to the site - call their 800 number and make an appointment. Reviews call them angels from above. They call your creditors, and work out a deal with them (if possible), to reduce rates, settle, negotiate smaller payments, - they'll try anything. Debt consolidation is not a good choice and most require some sort of collateral. Also MAKE SURE to run and run away fast from any company that has or breathes the name negotiation or settlement. They are out there to make money FROM you - not to help you. They will allow your bills to go upaid - this ruins credit. Ask here how debt companies work - lots to explain, but people end up in court anyway. While the managers bought thier wifes new BMW's with your money. /

Posted by: Kate Hottie on 2010-07-21, 15:36:27

Dont put expenses on your credit card. If you are late paying you will be charged late fees, your interest rate will increase around 5% every time you dont make a payment on time. The credit card companies will charge any way they can. Try and find things around the home to sell off - car/ s, anything you dont use, sell it. Im presently doing this to get our debt down. You can down grade cable, cut cell phones you dont need, no eating out, the list goes on. There are heaps of ways to do this. Check out the oprah.com site and search for the debt diet. You will find some excellent advice. Apply for unemployment asap. In my town there are food banks one can go to and get a weeks worth of groceries for free, week after week. Hope this helps.

Posted by: Jamie on 2010-07-21, 16:04:55

No - debt consolidation will not make the problem go away or reduce your repayment obligations. It is only going to consolidate all of them under one lender. A consolidation may slightly reduce your total monthly debt payments (by extending the amount of time required to pay off the debt or by slightly reducing your loan rate), but the debt will still exist and you will still have to pay on it. The only way this would be very beneficial is if you have positive equity in your home and you use it as collateral for the consolidation. If you are living off of credit cards, then your answer is to REDUCE YOUR LIVING EXPENSES to less than the amount of income that you have coming in. The only way to save your credit score is to continue to pay your credit bills on time - and you can only do this if you are not engaging in deficit spending. If you do not reduce your spending to a level that is supportable by your current income, then no amount of "help " or "assistance " or "consolidation " or "refinancing " will save your credit score. Unfortunately, you are in a position that you will not be able to save your credit score. Your credit score suffers when you can not afford to pay your bills. You need to forget about the credit score, and move into survival mode. If you are charging basic living expenses, then you are not able to afford your life style. You need to dump any expense that you can - this means going into austerity mode - moving to a cheaper place, eating cheaper groceries, eliminating entertainment and vacations, no dining out, turning off the AC and keeping the heat lowered and wearing sweaters at home and by using cheaper transportation. As long as you keep spending more than you are bringing in, the only thing that debt consolidation will do is cause your house to be taken from you.

Posted by: Jessica A on 2010-07-21, 19:48:27

Ok here's the deal with debt consolidation agencies. If they are not non profit they are going to have you make payments to them. The first 3 payments usually cover THEIR fees. Then they send proposals to your creditors which the creditors may or may not approve. Then after the creditors collect their fees they'll start making payments. Keep in mind, those three months u paid them your creditors are not getting paid. This means your accounts are getting more and more past due and depending what state you're in you may be pending litigation on that account, and at that point most creditors are not willing to work with your agency until you resolve the account with them directly. Then you're stuck making a huge payment to your agency and another pmt to your creditor and you're even worse off. Be really cautious and ask A LOT of questions before you decide to sign up with them.

Posted by: Andrea Mason on 2010-07-22, 13:44:44

Http:/ / debtreliefreviews.net/ top-debt-consolidation-companies/ has good information and several reviews for debt consolidation companies.

Posted by: Veo on 2010-07-24, 05:02:10

With debt consolidation, you have just one payment to make per month. You make this payment to a single creditor. If for some reasons, your payments are not on schedule then your credit scores might suffer due to bad payment history. Since you only owe to a single creditor, the chances of improving on your payment history by making other payments on-time do not exist. There are times when a number of credit checks are done on your credit report by your creditor. This has an adverse effect on your credit scores.